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Analysts soured on Roche this week after the pharma giant acknowledged that its Alzheimer’s disease candidate gantenerumab became the latest in a decades-long string of clinical failures among treatment candidates for the memory-robbing neuro disease.
Gantenerumab failed the Phase III GRADUATE I (NCT03444870) and GRADUATE II (NCT03443973) trials by missing their primary endpoints of slowing clinical decline. Patients treated with gantenerumab showed reductions in cognitive decline of 8% (-0.31, p=0.0954) in GRADUATE I and 6% (-0.19, p=0.2998) in GRADUATE II from baseline score on the Clinical Dementia Rating-Sum of Boxes (CDR-SB)—neither of which was statistically significant.
“This news is very disappointing to deliver,” Levi Garraway, MD, PhD, Roche’s chief medical officer and head of global product development, lamented in a statement. “While the GRADUATE results are not what we hoped, we are proud to have delivered a high quality, clear and comprehensive Alzheimer’s dataset to the field, and we look forward to sharing our learnings with the community as we continue to search for new treatments for this complex disease.”
Roche said it will present topline findings of the GRADUATE I and II studies on November 30 at the Clinical Trials on Alzheimer’s Disease (CTAD) Conference, to be held in San Francisco.
The company added that it “remains committed to Alzheimer’s disease,” and to that effect “is continuing to develop and deliver tests to enable early and accurate Alzheimer’s diagnosis and has a pipeline of investigational medicines for different targets, types and stages of the disease.”
Analysts at two firms responded with quick downgrades or Roche stock. Cowen analyst Steve Scala went from “Outperform” to “Market Perform,” and announced his firm set a $48 price target. Stifel Nicolaus analyst Eric Le Berrigaud went further, cutting his firm’s price target on Roche from CHF 375 to CHF 345 ($397 to $365), in addition to lowering its rating from “Buy” to “Hold.”
Investors appeared more sanguine than the analysts about Roche, judging by the decline in its share price. Roche (ROG), whose shares trade on the SIX Swiss Exchange, saw its stock decline 4% on Monday, from CHF 325.60 to CHF 312.65 ($344.84 to $331.13) before inching up 0.5% on Tuesday, to CHF 314.35 ($332.94).
However, Roche’s collaboration partner in developing gantenerumab, MorphoSys, incurred the fuller wrath of investors. MorphoSys (MOR) shares on the Frankfurt Stock Exchange’s Prime Standard market segment tumbled 29% on Monday, from €20.90 to €14.80 ($21.72 to $15.38), after joining with Roche to announce the clinical trial failures of gantenerumab. MorphoSys continued its stock slide, declining 2% on Tuesday to €14.56 ($15.13), then dipping another 1% on Wednesday, to €14.40 ($14.97).
Biogen, Lilly stand to gain
Two other analysts highlighted rival developers of amyloid beta-targeting antibodies indicated for Alzheimer’s that may stand to gain from Roche’s setback with gantenerumab. Two such companies are Biogen and Eisai, the developers of lecanemab (formerly BAN2401), an anti-amyloid beta (Aβ) protofibril antibody designed to treat mild cognitive impairment (MCI) due to AD and mild AD (collectively called “early AD”) with a confirmed presence of amyloid pathology in the brain.
“From a competitive standpoint, Roche’s result means Eisai/BIIB’s lecanemab remains the only product that has shown an unequivocally positive dataset in early AD [Alzheimer’s], and the stock is up nicely on the news,” Sumant Kulkarni, Senior Biotechnology Analyst with Canaccord Genuity and a managing director, wrote Monday in a research note.
Lecanemab is under FDA review for accelerated approval, with a target decision date of January 6, 2023, under the Prescription Drug User Fee Act (PDUFA). The FDA accepted Eisai’s Biologics License Application (BLA) for lecanemab under the accelerated approval pathway and granted Priority Review in July.
Biogen and Eisai said September 27 that lecanemab aced their confirmatory Phase III Clarity AD trial (NCT03887455) by achieving the study’s primary endpoint of statistically significant reduction in the Clinical Dementia Rating-Sum of Boxes (CDR-SB) at 18 months compared to placebo.
Lecanemab treatment reduced clinical decline on CDR-SB by 27% (-0.45, p=0.00005) in the study, which enrolled 1,795 patients with early AD—of which about 25% of the roughly 1,030 U.S. patients were Hispanic or African American. Lecanemab also met all of the study’s key secondary endpoints with highly statistically significant results, the companies added.
Biogen and Eisai are also set to present further data at CTAD in San Francisco. “We will be looking for more details on what lecanemab’s CTAD data might mean from a regulatory/labeling perspective,” Kyulkrni said, citing the FDA’s initial broad label for Biogen/Eisai’s controversial Alzheimer’s drug Aduhelm® (aducanumab), which won accelerated approval last year
In March, Biogen obtained sole decision-making authority over the development, commercialization and manufacturing of Aduhelm when Eisai gave up sharing global profits in favor of a global royalty arrangement starting at 2% and reaching 8% when annual sales exceed $1 billion.
Kulkarni has projected worldwide peak sales for lecanemab of $4.2 billion in 2033: “Given the significant size of the AD market, we could be conservative, but we would prefer to wait for additional data before we can get more comfort around even higher sales.”
Lecanemab’s clinical success sparked a 40% surge in Biogen’s stock, from $197.79 to $276.61. As investors sold off shares of Roche and MorphoSys on Monday, they bought into Biogen enough to send its shares rising 3%, from $289.45 to $299.06.
Biogen shares increased 3% on Monday after Roche’s announcement, from $289.45 to $299.06. Eisai shares, which trade on the Tokyo Stock Exchange, nearly doubled, rose nearly 6% Tuesday (the first trading day after Roche’s announcement), from ¥8,288 to ¥8,753 ($58.98 to $62.29).
Another potential beneficiary from Roche’s failed GRADUATE trials is Eli Lilly.
‘Although Roche’s gantenerumab failed in two Alzheimer’s trials, the news is positive for perception of LLY’s donanemab because the trials showed a positive cognitive benefit trend,” David Risinger, CFA, Head of Diversified Biopharmaceutical Research and a senior managing director with SVB Securities, wrote Monday in a research note that maintained his firm’s “Outperform” rating on Lilly.
Donanemab, which targets a modified form of Aβ called N3pG, is the subject of a Phase III study whose results are expected in the second quarter of 2023. In September, researchers from Lilly and its Avid Radiopharmaceuticals subsidiary published a study in JAMA Neurology showing that the complete amyloid plaque clearance achieved with donanemab in the Phase II TRAILBLAZER-ALZ trial (NCT03367403) was associated with lower amyloid at baseline and slower disease progression at 76 weeks.
The study also showed that participants with higher baseline amyloid levels experienced a greater magnitude of change over 24 weeks, while those with lower baseline amyloid levels were more likely to achieve complete amyloid clearance: “These results predict that those with lower baseline amyloid levels are more likely to be able to stop donanemab treatment sooner,” the researchers concluded.
Illumina flat following job cuts
Illumina (ILMN) shares rose 3% on Tuesday, from $234.57 to $238.49—then fell 3%, to $231.79—after the sequencing giant disclosed in a regulatory filing Monday that it will cut its global workforce of more than 9,100 people by “approximately 5%,” for which it will take a charge against fourth-quarter earnings to reflect the restructuring.
“The Company is proactively realigning Core Illumina operating expenses to reflect the current macro-economic environment while maintaining focus on its innovation roadmap and sustainable long-term growth,” Illumina stated in the filing.
Illumina is slicing its workforce just two weeks after reporting third-quarter 2022 results that included a $3.91 billion “goodwill impairment” charge against earnings due to its “primarily due to the negative impact of current capital market conditions and higher discount rates, including a standalone risk premium, on the fair value calculation of the Grail segment.”
Based on that impairment, Grail finished Q3 with a $4.101 billion operating loss, down from a $750 million operating loss in Q3 2021. Grail revenues quintupled year-over-year from $2 million to $10 million, driven by John Hancock becoming the first insurer to offer customers access to the test. Grail is expected to generate between $55 million and $65 million in revenues this year.
Grail is the cancer blood test developer acquired by Illumina last year for $7.1 billion—a deal that remains at the center of regulatory challenges by the U.S. Federal Trade Commission (FTC) and the European Union. Illumina reports its results based on two segments—Grail and its namesake operations, which it calls “Core Illumina.”
In September, Illumina won one battle against regulators and lost another as an FTC administrative law judge ruled in its favor against the agency’s challenge to the Grail acquisition. Soon after, the EU blocked Illumina’s deal, concluding that it would stifle innovation and reduce choice in the emerging market for blood-based early cancer detection tests. The EU cited Illumina being the only “credible” supplier of sequencing technologies to develop and process Grail’s Galleri™ test.
According to Illumina, Galleri can detect more than 50 cancers across all stages—of which more than 45 do not have recommended screening in the United States—and correctly identified the tissue of origin in 93% of positive results, with >99% specificity.
The Grail impairment charge also prompted Illumina to lower its investor guidance for this year, from a 4-5% rise in revenue vs. 2021 to between flat and 1%, with a GAAP diluted loss per share of between $(26.56) and $(26.41), well above the previous range of between $(2.93) and $(2.78).
Illumina said its Core Illumina revenue growth is now expected to be approximately flat from fiscal year 2021 compared with the 3.5% to 4.5% increase projected previously. Grail projected revenues for this year were also revised from the earlier range of $50 million to $70 million.
For Q3, Illumina reported a 1% increase in revenue to $1.12 billion, driven by 50 orders from customers globally for its NovaSeq X sequencing instrument, which the company unveiled in September at its annual conference, the Illumina Genomics Forum.
IPO lifts precision cancer therapy developer
Acrivon Therapeutics (ACRV) shares jumped 33% to $16.64 on Tuesday, the company’s first day as a publicly traded company, having launched an initial public offering (IPO) price that raised $99.4 million in gross proceeds. Shares inched up 1% on Wednesday, to $16.75.
The auspicious debut was a reflection of early investor interest in Acrivon, which develops precision oncology therapies through its proteomics-based patient responder identification platform. The company says it matches its treatments to patients whose tumors are predicted to be sensitive to each specific medicine.
Based in Watertown MA, Acrivon is developing a pipeline whose lead program ACR-368 (also called Prexasertib), which the company in-licenses from Eli Lilly. ACR-368 is a selective inhibitor of the DNA damage response checkpoint kinases CHK1 and CHK2 that according to the company has shown deep, durable single-agent anti-tumor clinical activity, including complete responses, in patients with platinum-resistant ovarian cancer and squamous cell cancer.
Acrivon has also identified endometrial and bladder cancer as two additional high unmet need solid tumor types that it predicts will be highly sensitive to the drug candidate.
Acrivon sold 7.55 million shares at the $12.50 IPO price per share on the Nasdaq Global Market, under the ticker symbol ACRV. The company has granted its IPO underwriters a 30-day option to purchase up to an additional 1,132,500 shares of common stock at the IPO price, less underwriting discounts and commissions.
In addition, Acrivon announced a concurrent sale of 400,000 shares of common stock at the public offering price per share in a private placement to one of its existing shareholders, Chione Limited.
Jefferies, Cowen and Piper Sandler are acting as joint lead book-running managers for the IPO.
4DMT sees gains from Wet AMD data
4D Molecular Therapeutics (FDMT) shares rocketed 68% this week after the company announced positive interim clinical data Monday from the five patients enrolled in cohort 1 of its Phase I/II trial (NCT05197270) assessing its intravitreal 4D-150 as a treatment for wet age-related macular degeneration (wet AMD).
After being dosed with intravitreal 4D-150, the cohort 1 patients showed a 96.7% reduction in their annualized anti-VEGF injection rate. Four of the five patients did not need to receive any supplemental aflibercept injections for up to about 10 months after dosing at the low dose of 3E10 vg/eye, based on follow-ups at 16, 32, 36, and ~40 weeks, according to the company, which calls itself 4DMT for short.
4DMT described the five as high need patients who in the 12 months preceding trial enrollment had a mean annualized anti-VEGF injection rate of ~11. And in three of the five patients who were evaluated to date, 4D-150-mediated expression of the aflibercept transgene protein was demonstrated in the aqueous humor of the eye at 12 weeks following injection with the treatment.
The five patients were in one of three five-patient cohorts, each cohort given one of three dose levels, expected to range from 3E10 to 1E10 vg/eye. The trial’s dose exploration stage has been completed, and will be followed by a Phase II stage set for the first quarter of 2023, in which 50 patients will be randomized to one of two doses levels of 4D-150 vs Bayer/Regeneron Pharmaceuticals-marketed Eylea® (aflibercept) in a 2:2:1 ratio.
Additional data is set for release in the second quarter of 2023.
4D-150 consists of a dual transgene payload designed to express aflibercept and an anti-VEGF-C RNAi, and a proprietary vector R100 for low dose intravitreal delivery. According to 4DMT, 4D-150 is the first retinal gene therapy that is designed to inhibit all four VEGF-related molecules that drive angiogenesis.
“This clinical data on 4D-150 marks an important milestone for 4DMT,” David Kirn, MD, 4DMT’s Co-founder and CEO, said in a statement. “We are developing 4D-150 for the treatment of large and sustainable markets in ophthalmology, including wet AMD and diabetic macular edema. We believe these results further validate the potential for both our intravitreal R100 vector for other large market eye diseases, and our Therapeutic Vector Evolution platform as an engine to grow our product pipeline.”
4DMT shares rose 8% the day of the announcement, from $12.51 to $13.49, then leaped 38.5% on Tuesday to $18.69 and jumped another 12% on Wednesday, to $21.01.